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Archives for January 2022

Bow River Adds New Managing Director

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Bow River Capital has added Ben Schnakenberg to its private equity investment team as a new managing director.

Working with Managing Director Greg Hiatrides, Mr. Schnakenberg – who has more than 20 years of experience in the lower middle market – will be active directing the group’s lower middle market investment activities and working with portfolio company management teams.

“As we expand Bow River’s private equity platform, Ben will play an integral role in our fund strategy, transaction execution, and the strategic management of our portfolio companies,” said Mr. Hiatrides. “We are pleased to have someone with Ben’s experience and leadership on our team as we continue investing capital on behalf of our investors.”

Prior to joining Bow River, Mr. Schnakenberg was a partner at New York-based High Road Capital Partners. He joined High Road in 2008 and most recently was a lead transaction partner responsible for evaluating investment opportunities, executing transactions, and overseeing portfolio company investments. Earlier in his career, he was with LaSalle Bank (now part of Bank of America) and Madison Capital Funding.

“I’m excited to join Bow River, working alongside Greg and the entire team to accelerate the growth of our private equity platform and partnering with management teams to enhance the value of their businesses,” said Mr. Schnakenberg.

Mr. Schnakenberg earned his MBA degree from The Wharton School at the University of Pennsylvania and his undergraduate degree from Valparaiso University.

Bow River invests in the lower middle market across three asset classes, including private equity, real estate, and software growth equity. Within private equity, the firm makes control investments in companies that have revenues from $25 million to $200 million and EBITDA from $5 million to $20 million. Sectors of interest include infrastructure and engineering services, industrial services, healthcare services, and tech-enabled business services. Bow River was founded in 2003 and is headquartered in Denver.

© 2022 Private Equity Professional | January 6, 2022

Gridiron Sells Into Legal Services Consolidation

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Gridiron Capital has sold Legility, a provider of outsourced legal services to in-house legal departments and law firms, to Consilio, a portfolio company of Stone Point Capital.

Nashville-headquartered Legility provides technology-enabled legal services, including consulting, technology, managed services and flexible staffing to corporations and law firms. The firm’s managed services include transactional, repetitive, or high-volume legal work for contract lifecycle management, eDiscovery, data governance, data analytics, and regulatory compliance.

Legility maintains a network of more than 1,000 domestic and international lawyers, engineers, consultants, technology and data specialists, and operational experts that serve more than one-third of the Fortune 100 and one-quarter of the Am Law 200. The company has offices and datacenters in Nashville, Atlanta, Seattle, Palo Alto, San Diego, Dallas, Ft. Worth, Oklahoma City, Chicago, and Washington DC; and international offices and data centers in the United Kingdom (2) and Germany.

Gridiron invested in Legility, then known as Counsel on Call (the name was changed in November 2018), in April 2014 with the intent to expand the company’s services, geographic footprint and client base.

During Gridiron’s investment term, the company expanded from focusing exclusively on flexible staffing services and managed services to providing a full suite of outsourced data services and tech-enabled services to corporate general counsels. Over Gridiron’s seven-plus year hold, Legility grew its geographic service area from the southeastern United States to full nationwide and European coverage.

“We have really enjoyed and benefited from our partnership with Gridiron, which has supported Legility’s transformation and expansion,” said Barry Dark, CEO of Legility.

“We are extremely proud of the Legility team and the outstanding growth that they achieved during our partnership,” said Tom Burger, the co-founder and managing partner at Gridiron.

Consilio, the buyer of Legility, was formed by GI Partners in April 2018 to acquire two legal services providers – Advanced Discovery, a portfolio company of Trivest Partners, and Consilio, a portfolio company of Shamrock Partners and Trinity Hunt. In April 2021, Stone Point Capital and Aquiline Capital acquired and merged Consilio with Xact Data Discovery, a portfolio company of JLL Partners.

Today, Washington DC-headquartered Consilio, led by CEO Andy Macdonald, has more than 4,000 employees and offices and datacenters in more than 11 countries.

“Legility has a proven track record of creating excellent predictive and automated enterprise-wide legal driven processes that blend analytics, purpose-built workflows, and information-driven process improvements that help legal teams achieve operational success,” said Mr. Macdonald. “This acquisition unlocks greater scale and resources while aligning with our strategy to invest in differentiated solutions that result in a consistently exceptional client experience.”

“It has been an honor to work with Barry Dark and the entire team at Legility to build a unique tech-enabled legal services business that brings innovation to the legal market,” said Will Hausberg, a managing director at Gridiron.

Gridiron invests in manufacturing, service, and specialty consumer companies with enterprise values from $75 million to $600 million and EBITDA from $10 million to $60 million. Sectors of interest include branded consumer, business-to-business and business-to-consumer services, and niche industrial.

Just before year-end 2021, Gridiron announced the sale of Simpsonville, South Carolina-headquartered Essential Cabinetry, a maker of stock, semi-custom, and custom kitchen and bathroom cabinets, to Dallas-based Breck Partners.

In December 2020, New Canaan, Connecticut-based Gridiron held a hard-cap and oversubscribed closing of its largest fund, Gridiron Capital Fund IV LP, in December 2020 with $1.35 billion of capital.

© 2022 Private Equity Professional | January 4, 2022

Benford’s Latest Buy Looks Eggcellent

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Benford Capital has formed Pasture Brands Holdings and has acquired Farmers Hen House in partnership with the company’s CEO Ryan Miller.

Farmers Hen House sources, processes, packages and sells branded and private label eggs with a specific focus on premium varieties including organic, free-range, and pasture-raised eggs. The company maintains a network of more than 70 local, primarily Amish and Mennonite, farmers to source its eggs and its products are sold to natural, supermarket, mass, and club channel customers.

Farmers Hen House was founded in 1997 and operates a solar-powered, SQF-Level III facility located 20 miles southwest of Iowa City in Kalona, Iowa.

“We were seeking an investment partner who understands our business and has experience in scaling food brands,” said Mr. Miller. “We also wanted a partner who values our role in the community and our commitment to sustainability while creating continued growth opportunities for our dedicated, driven team. We believe our partnership with Benford Capital will help us build upon our strong foundation with our customers and growers in the years ahead.”

“Ryan and the Farmers Hen House team have built a great brand on a commitment to quality and animal welfare,” said Ben Riefe, a managing director at Benford Capital. “Our team’s experience with branded food businesses and supermarket distribution enabled us to develop conviction around a value creation plan aligned with Ryan’s long-term goals for the business.”

Benford’s plan for Farmers Hen House includes a range of marketing and operational investments, new product development, and add-on acquisitions of natural, fresh, refrigerated food and beverage products.

“We are excited to partner with Ryan Miller and the team in Kalona,” said Brian Behm, a principal at Benford Capital. “We look forward to leveraging the collective experience of the Benford team and our executive partners to help Pasture Brands achieve its growth objectives in the coming years.”

Chicago-based Benford invests in lower middle-market companies that have revenues from $5 million to $50 million. Sectors of general interest include niche manufacturers, unique service companies, and specialty distributors with a specific interest in industrial technology, consumer products and food, B2B e-commerce, and agricultural products and services.

The buy of Farmers Hen House by Pasture Brands Holdings closed on December 15, 2021.

© 2022 Private Equity Professional | January 4, 2022

Auxo Builds Rail Maintenance Platform

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Auxo Investment Partners has acquired Ferrovia Services, a provider of vegetation management services to North American-based railroads. Post-closing, Auxo will combine Ferrovia with Genesis Rail Services, a platform company that it acquired in October 2021.

Genesis Rail provides maintenance of way, construction, and mechanical services to Class I, Class II and industrial railroads across the country including Kansas City Southern, Norfolk Southern, Canadian National, Amtrak, and Florida East Coast Railway.

Railroad classes are defined by revenue size with Class I railroads having annual revenues above $505 million; Class II – typically regional railroads – having revenues from $40 million to $505 million; and Class III – typically short line railroads – having revenues below $40 million. In 1900, there were 132 Class I railroads, but as the result of mergers and bankruptcies, the industry has consolidated and as of August 2021, just 7 Class I railroads remain.

Genesis Rail’s services include track construction and repair; rail tie and plate distribution, installation, and removal; railcar rerailing, maintenance and repair; traction motor and railcar wheel change-outs; and ballast cleaning.

Genesis Rail has facilities in Bluefield, West Virginia (headquarters), and Roanoke, Virginia. The company was founded in 2009 by Jeff Harman and today, in partnership with Auxo, is led by his son Cody Harman.

Auburn, Alabama-based Ferrovia provides vegetation maintenance, inspection, and abatement services to North American-based Class I railroads, as well as a variety of Class II, short line, industrial railroad customers, utilities, and government agencies including state departments of transportation (DoTs).

Ferrovia was founded in 1976 by Jeff Welsh and today is led by CEO Allen Blythe and COO Ryan Cammack. Post-closing, all three executives will maintain an equity ownership in the combined company with Messrs. Blythe and Cammack continuing in their existing roles, and Mr. Welsh remaining in an advisory role.

“Auxo’s deep understanding of the rail industry, customer-first mindset, and philosophy of partnering with founder-led businesses to preserve their autonomy while accelerating next-level growth, really set them apart,” said Mr. Blythe. “Our company has grown significantly for the last five years and working with Auxo and Genesis will position us to move into other services while continuing to service our existing customers, affirming our commitment to innovation, and expanding our vegetation management work to other railroads and DoTs.”

According to Auxo, the railroad industry – driven by the economic recovery, needed restocking conditions, and a tight trucking market – is projected to see significant growth, particularly in the area of intermodal freight, leading to more wear-and-tear and increased demand for rail maintenance. In addition, a heightened focus on more sustainable forms of transportation is expected to drive an increase in rail volumes, and in turn, the need for ongoing maintenance of rail infrastructure. America’s seven Class I railroads together have an estimated repair budget of $7.2 billion, a number that is expected to grow in the coming years.

“As railways continue to outsource mission-critical maintenance services to meet efficiency standards and targeted operating ratios, adding Ferrovia’s best-in-class vegetation management capabilities to Genesis Rail’s existing services creates a unique offering within the railroad industry,” said Jeff Helminski, an Auxo co-founder and managing partner. “With Genesis and Ferrovia integrated into a single platform, their full-service offerings provide our customers with a highly capable, safety-focused and cost-effective track maintenance solution.”

John McPherson, an Auxo’s operating partner and a member of the Genesis Rail board of directors, advised Auxo on the Ferrovia and Genesis acquisitions. “Given its complementary, but not overlapping, service offerings and customer base, Ferrovia will make an excellent fit alongside Genesis,” said Mr. McPherson. “The culture that Allen Blythe has established at Ferrovia is something to be proud of. He knows the industry, how to satisfy the needs of customers, the chemistry between his people, and most importantly, how to run a growing and profitable business.”

In addition to his work with Auxo, Mr. McPherson serves on the board of directors of publicly traded CSX Corporation (NASDAQ: CSX), a Jacksonville-based provider of rail-based freight transportation services with annual revenues of more than $10.5 billion. Mr. McPherson was the president and chief operating officer of Florida East Coast Railway, a subsidiary of Florida East Coast Industries, from 1999 until his retirement in 2007. Earlier, from 1993 to 1999, Mr. McPherson held senior positions, including chief executive officer, at Illinois Central Railroad which was acquired by Canadian National Railway in 1998. Earlier in his career, Mr. McPherson served in various executive capacities at Santa Fe Railroad for more than 25 years.

Auxo invests in North America-based companies that have from $2 million to $20 million of EBITDA. Sectors of interest include manufacturing, industrial, value-added distribution and business services. Typical investments for Auxo occur at corporate transition points, including owner-operators planning retirement, companies exploring family succession, and ownership/management teams seeking growth capital. The firm prefers majority-control investments but will consider select minority opportunities.

Auxo was founded in October 2016 and is led by Mr. Helminski, Jack Kolodny and Fred Tedori. The firm, which is named after the Greek goddess of growth, has offices in Grand Rapids, Michigan, and Los Angeles, California.

© 2022 Private Equity Professional | January 4, 2022

Bessemer Invests in Pet Flavors

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Bessemer has made an investment in Pet Flavors, a producer of flavor bases and ingredient systems that are used in pet-specific pharmaceuticals and nutritional supplement products.

Pet Flavor’s palatable, aromatic and stable flavor bases include artificial powdered beef flavor; natural chicken powdered flavor, sweet apple and molasses, natural liver powdered flavor, and a newly developed hypoallergenic and vegan base flavor. The company’s products – sold in the United States, Canada, Europe, India, Brazil, and Mexico – use United States-sourced ingredients and are preservative-free, grain-free, and contain no artificial coloring.

The company’s flavor bases are tested by independent United States-based FDA/USDA approved laboratories to ensure that physical, chemical and microbiological specifications are met. Pet Flavors was founded in 1990 and operates a USDA-inspected and approved facility in Melbourne, Florida.

Bessemer intends to establish Pet Flavors as a platform investment in the companion animal health industry and is partnering with the company’s founder, Mark Pieloch, on this transaction. Post-closing, Mr. Pieloch will remain at the company as its president.

“We are very pleased to be partnering with Bessemer as we move toward the next stage in our growth,” said Mr. Pieloch. “The Bessemer team is aligned with our values, and we believe their long-term and flexible approach will help us expand into additional products while continuing to strengthen our alliances with pharmaceutical and nutraceutical companies all over the world.”

“Pet parents want the experience of giving their pets medication to be as seamless as possible, which makes flavoring a key component of that relationship,” said Andrew Mendelsohn, a principal at Bessemer. “Pet Flavors’ commitment to quality and execution as well as its strong relationships with top animal health and supplement companies have helped it establish a reputation as the leading manufacturer of flavor bases. We are excited to team with Mark and the company to build on their 30-year history of market leadership, innovation and partnership with the leading global animal health companies.”

New York City-based Bessemer invests from $50 million to $150 million of equity in companies that have from $10 million to $50 million of EBITDA and enterprise values from $75 million to $500 million. Sectors of interest include industrials, business services, and consumer products and services.

Bessemer was formed in 2018 and is an investment vehicle of Bessemer Securities, a multi-family office led by the Phipps family whose wealth originated from the partnership between Henry Phipps and Andrew Carnegie, and the sale of Carnegie Steel to JP Morgan in 1901. Bessemer Securities is named after the Bessemer steel-making process – developed by Sir Henry Bessemer in 1855 and used by Carnegie Steel – that allowed for the low cost and efficient production of steel from iron.

Lincoln International was the financial advisor to Bessemer and Capitalmind advised Pet Flavors. BMO is the lead financial institution on the debt financing for the transaction.

© 2022 Private Equity Professional | January 4, 2022

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